Virtua Fighter 2 was known for its breakthrough graphics. It used Sega's Model 2 arcade hardware to run the game at 60 frames per second at a high resolution with no slowdown (by comparison, the original Virtua Fighter ran at 30 frames per second).[4] It introduced the use of texture-mapped3D characters,[5] and motion capture animation technology.[6] The Saturn version was also well-received for its graphics and gameplay. It became a huge hit in Japan and sold relatively well in other markets, notably the UK, where The Prince (Hatim Habashi) was crowned by Sega Europe as the Official UK Virtua Fighter 2 Champion.[citation needed]

The arena size could be adjusted up to a very small platform or all the way to 82 meters. This is the only game in the series—other than Virtua Fighter Remix—that could have such size adjustments. The physical energy meter could also be adjusted to infinity, giving the player the advantage when beating opponents or practicing moves against the computer player. Adjusting the arena to a smaller size and giving the characters infinite health could lead to mock sumo matches, wherein victory is achieved by knocking the other player's character out of the ring.

At the beginning of 1995, Sega AM2's Sega Saturn division was split into three sub-departments, each one charged with porting a different arcade game to the Saturn: Virtua Fighter 2, Virtua Cop, and Daytona USA. Due to unexpectedly slow progress in the Daytona USA port, a number of members of the Virtua Fighter 2 team were reassigned to Daytona USA. In March, AM2 Research completed the Sega Graphics Library, a Saturn operating system which made it feasible to create a near-arcade perfect port of Virtua Fighter 2 for the Saturn.[7][8]

After completing the Daytona USA port in April, the team took a short holiday before beginning work on the Virtua Fighter 2 conversion in earnest.[8] In June, AM2 gave the first public demonstration of Saturn Virtua Fighter 2 at the Tokyo Toy Show. To increase confidence in the accuracy of the port, they displayed non-playable demos of the characters Lion, Shun, Pai, and Lau running on the Saturn hardware at 60 frames per second - the same speed as the arcade version.[7]

However, AM2 continued to face problems in creating an accurate port for the Saturn. Due to the high number of moves in Virtua Fighter 2, months had to be spent on developing compression techniques in order to fit all of the game's moves onto a single CD.[7] Also, in order to maintain the 60 frames per second, the Saturn version could not use nearly as many polygons as the arcade version. To make this difference less apparent, the programming team used texture mapping on the characters, taking advantage of the fact that the Saturn could map 16 different colors to each polygon, whereas the Model Two arcade hardware could map only 1. In addition, the polygon background objects of the arcade version were replaced with parallax scrolling playfields with selective scaling.[7] The AM2 team also used data from Virtua Fighter Remix as a reference for some elements.[9] In an interview during development, Keiji Okayasu discussed the team's struggles with getting the Saturn version to run at 60 frames per second:

If we didn't have to consider the speed, we could do the conversion very quickly. But with so much data, we can only move slowly. With Virtua Fighter 1 we could use the arcade data for each technique with just a few changes, but with 2 there's just too much data. But we have done well, although how is a secret... I think we couldn't have made 2 if we hadn't made the first conversion - but it's just as tough! We owe a lot to the new SGL OS [Sega Graphics Library Operating System] software.[10]

By the end of September, hit detection had been enabled, and the now fully playable conversion was displayed at the JAMMA show.[8] Taking into account audience reactions at the JAMMA show, the team spent the next two months on final adjustments, play-testing, and the addition of Saturn-specific options. Development on the port was completed in November 1995.[8]

Virtua Fighter 2.1 is a revised version featuring re-tweaked gameplay, slightly enhanced graphics and the ability to play as Dural.[11] Though it was never released outside of Japan,[12] it is possible to switch to the 2.1 game mechanics in the Saturn and PC ports, however none of the other features are updated. This version was also released in the Sega Ages 2500 series.

Sega reported pre-orders of 1.5 million units for Virtua Fighter 2 in Japan, which is nearly as many of the number of Saturns that had been sold in Japan at that point.[13] At the time of its release, Virtua Fighter 2 was the top-selling game for the Saturn, and remains the highest selling Saturn game in Japan with 1.7 million copies.

Virtua Fighter 2 received generally positive reviews. Next Generation gave the game a perfect 5/5 stars, calling it "the ultimate arcade translation" and "the best fighting game ever."[22] The magazine cited its "accurate representation of 10 very distinct and realistic fighting styles", "remarkable AI", and "a general attention to detail that sets a new mark for quality game design."[23]Sega Saturn Magazine gave the Saturn version a 98%, citing the smooth frame rate, the realistically varied reactions to blows, the huge variety of moves, and the addition of features such as Team Battle Mode.[24] Similarly praising the variety of moves and the accuracy of the port, Game Revolution gave the Saturn version an A and concluded that "Virtua Fighter 2 for the Saturn looks better and smoother than any other polygonal fighting game for the next generation systems. This just might be the best home console fighting game ever."[19] The four reviewers of Electronic Gaming Monthly felt the port was not as arcade perfect as it could have been, but highly praised the wealth of options and modes, with two of their reviewers declaring it by far the best fighting game on the Saturn thus far.[16]Game Informer's Andy, Reiner, and Paul were slightly more mixed, praising Virtua Fighter 2 for its depth and variety but criticizing inferior background details in the Saturn port. In addition, Paul felt that the original Virtua Fighter required more strategy.[18]

GameSpot gave the PC version a 8.1/10. Praising the game's realism, depth, and opponent AI, and the PC version's inclusion of online multiplayer, they deemed it "unquestionably the best fighting game on the PC, and certainly one of the finest fighting games of all time", adding that the PC version "rivals even the excellent Sega Saturn console port."[20]

Virtua Fighter 2 was ranked as the 19th best arcade game of the 1990s by Complex.[25]